In the information age, perhaps the only system left that hasn't gone completely digital or to the cloud is health care. Even insurance companies, who warehouse massive amounts of data, rarely share it with other insurance companies when an employee moves from one job to the next. And for patients to gain access to their own heath records, which largely are maintained on paper, they have to go through a lengthy process - on paper.

Although the paper-driven world is changing - experts predict massive changes in the way health care is delivered and paid for in the next 10 years - digital advances will come at a cost to taxpayers, hospitals, physicians and employers. However, the light at the end of the tunnel is massive cost savings. In 2010, annual net savings to the health care sector for implementing these systems was around $80 billion.

In addition to the financial savings, imagine that patients could:

* Have near-instant access to a doctor or nurse through an online portal.

* Track their cholesterol, blood pressure or blood glucose levels and receive reminders to refill medications.

* No longer endure duplicate medical testing when seeing a new provider or visiting the emergency room.

* Rest assured that physicians could easily review every aspect of their medical history, from a broken arm at age 6, to a complicated C-section delivery at age 33, to a heart attack at 55.

Although such scenarios sound idyllic, there is little incentive for these changes to happen, as implementation costs for such systems are high, while hospital budgets for information technology are low - usually ranging from 1% to 3% of overall operating expenses, according to the Congressional Budget Office.

CBO also reports that, on average, electronic health record implementation costs for hospitals are approximately $14,500 per bed. For physician groups, total implementation costs for office-based EHRs ranges from $25,000 to $45,000 per physician, with annual operating, licensing and maintenance costs ranging between $3,000 and $9,000 per physician.


Employers are apathetic

Medical providers have been slow to adopt electronic recordkeeping systems because employers - who provide the lion's share of health benefits and thus pay most of the costs - haven't demanded that they do so. A recent survey by the Midwest Business Group on Health showed that 29% of employers wouldn't be willing to pay more for a health plan that used electronic means to monitor a patient's condition, even though 74% said that such a system would save money in the long run.

"[Employers] don't see why it's their responsibility," says Larry Boress, president and CEO of the Midwest Business Group on Health. He says most employers think of the health care system in these terms: "I'm a purchaser. I shouldn't have to give them money for a quality product or pay more for safety. I don't tell my vendors how they should organize; if they're not doing a good job, I just don't buy from them."

The problem, he says, is that employers treat health care differently than any other industry. "The providers are saying, 'If you want better efficiency, it's going to cost more.' And then [employers] say, 'You mean I'm not paying for quality now?'"

David Lansky, CEO of the Pacific Business Group on Health, adds: "Employers have not been paying a lot of attention to this, which is risky. Our problem with what we're doing right now is we're working on an old system of each hospital of having [its] own servers and computers."

The Health Information Technology for Economic and Clinical Health, signed into law in February 2009, set aside $30 billion toward improving health IT. Most of this money went to the Centers for Medicare and Medicaid Services to pay doctors and hospitals to implement electronic health records. In 2011, nearly 34% of office-based physicians had adopted a basic EHR. Fifteen percent of nonfederal hospitals had adopted an EHR in 2010, a 29% increase from 2009, according to the American Hospital Association.

Andy Litt, Dell's chief medical officer, says providers can have the technical ability to provide electronic health records within 10 years, but adds that employers need to put the pressure on health plans and providers.

"Employers are focusing on their own business, so [electronic health records aren't] necessarily number one on the agenda," he says. However, he equates the wake-up call employers will get on the issue to the one they received about offering incentives to employees for smoking cessation and personal health. "That will happen with [electronic health records] as well. We're [eventually] going to pay bonuses to health care providers to reduce hospital admissions or who don't end up with unexpected costs." However, he notes, you can't do that without an information infrastructure.

Once the infrastructure is in place though, wellness incentives could easily be advanced. Instead of tracking employee's health internally, it could be tracked by the cloud and with every improvement, an automated system would send the employee a gift card or put money into a health savings account. "The electronic record will make it easier for everybody," says Russell D. Robbins, a principal and senior clinical consultant for Mercer's health and benefits business.

Employers have enormous buying power with health plans, which could be leveraged to include requirements about usage of electronic medical records. Or, Lansky suggests, providers who have implemented EHRs and have infrastructure to pass information between doctors and hospitals would be in-network.

At the end of the day, it's employees who are directly communicating with doctors' offices and hospitals. "Unless there is push by patients, it won't happen," Boress says.

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